Digital transformation: what is it, and what to do about it

What is “digital transformation”, and how to execute it for success? This deck explains how the success of internet startups to disrupt markets, together with four major technological drivers (big data & analytics, social & mobile, crowdsourcing & crowdfunding, and smart devices) are ushering a new era of information technology where operations are disrupted by new digital business models.

Fortune 500 companies are following up, as for example Starbucks that transforms customer engagement in its shops through mobile. Or Monsanto that revolutionizes planting with FieldScripts.

The deck suggests a 4 step approach to digital transformation, following best practices from lean startup methodology and DevOps.

Story-telling and digital branding

skills-cover4The art of story telling is as ancient as our species. Neuroscience has shown that our cognitive systems are wired for stories; indeed that it is through stories that our memories function. When we see something, or hear, or smell, or touch, or taste, our memory retrieves contextual information about the stimulus and builds a “narrative” about it. This is how we get to recognise and categorise what the stimulus is all about, and decide how to respond to it.

We can reverse engineer this cognitive process and ask ourselves how can we build recognisable brands that make people want to relate to them. Let me explain here that by “brand” I do not necessarily mean a commercial brand. It could be a charity, a scientific research organisation, a political party, a country, or a person – or anyone or anything that desires to be identified in positive terms by society at large. The key to building a brand is story-telling. If one can weave a compelling, emotive story around their brand, then people will react to it in a positive way. They will be able to identify with it. Importantly too, they will be able to “tell the story” to their friends, and therefore become links to a long chain of word-of-mouth.

But how do you build a story around a brand? This is where literary theory comes into play. Putting together the right words, creating excitement through a plot, sketching the main characters; all these are tools that can be used in putting together a compelling brand narrative. Starting from a stakeholder analysis and an organisational values analysis, the next step would be to compose representative and compelling vision and mission statements. These statements must somehow capture not only the keywords and the spirit of the brand, but also the narrative “yeast” to be used in putting together derivative narratives. Such derivative narratives, like stories within a story, could then be used to communicate the organisation across all channels and for every campaign.

Thus one does not need to keep inventing stories from scratch. The brand that possesses a strong narrative is a source of inspiration for any campaign; in advertising, lobbying or fundraising.

If you want to build a story for your brand, contact us!

Reinventing the business

This deck explains how a business integration approach can be applied in the era of digital transformation. Twenty years ago I used to apply the same approach in business re-engineering, with clients in several industries who wanted to automate their processes. At that time the challenge was to increase productivity by linking together information that existed in several “information silos” of a business (e.g. accounts, logistics, factory shop-floor, etc.). Nowadays, in the age of digital media. mobile, embedded intelligence and social networks, the challenge is of a different kind: reinventing customer experience, redesigning operations and, ultimately, reinventing the business model. In my deck I argue that the same methodology – i.e. strategy-technology-processes-people – can be applied.

Digital transformation: business reengineering in the age of ZMOT

Customers have changed the way they buy goods and services. According to the Social Trends Report 2013 (Bazaarvoice), before ever entering a store, 62% of Millennial shoppers already know what they want to buy through prior online research. Eighty-four percent of them say consumer-written content on brand sites influences what they buy.

The huge challenge for marketers is called “ZMOT” (“zero moment of truth”) and it nowadays makes difference between failure and success. In the good old days of brick and mortar a sales rep – or good retail marketing – would lead the customer to the “first moment of truth” (FMOT) , when he or she bought the good or the service. This moment was followed by the “second moment of truth” (SMOT) when they went home and reflected on the wisdom of their buying decision. FMOT secured short term sales. SMOT, if positive, created word-of-mouth, and drove new acquisitions in the sales funnel.

ZMOT is what happens when consumers browse on line for goods and services they might be interested in, read reviews written by other consumers, and decide whether to buy or not – well before they actually enter a store (whether bricks-and-mortar or on-line)

This cataclysmic change in consumer behavior calls for the “digital transformation” of many businesses. Digital transformation does not simply imply automating business processes. It means enabling major business improvements across a spectrum that begins with enhancing customer experience, to streamlining operations, to creating new business models (See “Starbucks Case Study” below). Ultimately this spectrum defines the map for the journey that every business will have to take to re-invent itself in the digital space and time.

But how should businesses go about digitally transforming themselves? At Feline Quanta we implement a business integration model approach to digital transformation. We therefore look at four dimensions of business re-invention.

Business Integration Model

Business Integration Model

1. Strategy: Companies need to envision themselves in the age of digital and plan a detailed map of the journey they need to take. They must assess their core competencies, look at the competition, as well as to enabling – or disruptive – technologies that affect their operations and current business model. They key to any business transformation is of course leadership. Sometimes it helps to introduce a “Chief Innovation Officer” (or VP) who will own the process of digital transformation.

2. Technology: How can social, mobile, embedded devices and a host of other disruptive technologies be integrated in order to drive the journey of digital transformation? How can ideas from agile methodology and lean startups be leveraged to develop new solutions and iterative models with the built-in ability to respond to changing consumers’ behaviors? How can data be used to effectively shape new relationships with consumers and other stakeholders?

3. Processes: How can business processes be re-designed and re-engineered in order to implement enhanced consumer experiences, or a complete re-invention of the business model? How can re-engineered processes be benchmarked and managed using applicable KPIs? How will digital transformation processes align with other IT systems in the company(e.g. ERP)?

4. People: What are the new sets of skills that are needed to drive the digital transformation of the business? How can these skills be obtained? How do training and hiring must change and adapt?

As businesses across the board become increasingly aware about the opportunities that digital transformation can confer (and the risks of not transforming), a Business Integration Model approach offers itself as a tested and well-structured method for success.

To find out more, please get in touch

Case Study: Starbucks

One company that has succeeded in digital transformation is Starbucks. In 2009, after dismal performance cut the company’s stock price in half, Starbucks looked to digital to help re-engage with customers. It created a vice president of digital ventures, hiring Adam Brotman to fill the post. His first move was to offer free Wi-Fi in Starbucks stores, along with a digital landing page with a variety of digital media choices, including free content from publications like The Economist . Starbucks was doing something innovative around how we were connecting with customers.  In collaboration with Curt Garner, Starbucks’ chief information officer, Brotman restructured their teams so that they collaborate from the very start of projects. Last year, they cut 10 seconds from every card or mobile phone transaction, reducing time-in-line by 900,000 hours.

Starbucks is adding mobile payment processing to its stores, and is processing 3 million mobile payments per week. Soon, customers will order directly from their mobile phones. Using social media, mobile and other technologies to change customer relationships, operations and the business model has helped Starbucks re-engage with customers and boosted overall performance. Its stock price has also bounced back up from roughly $8 in 2009 to nearly $73 in July 2013.

(Source: “Embracing digital technology” research report 2013, MIT Sloan Management Review.)

Financial engineering solution to drug discovery

How do you solve the problem of funding drug research, when the investment costs are so high and so risky? In the inspiring TED talk Roger Stein explains how together with colleagues they applied financial engineering practices to the problem. By designing a mutual fund for drug research, and structuring it in such a way so that it gives good annual returns, they placed drug discovery at the “sweet spot” of capital market investors, particularly institutional investors such as pension funds.

Roger Stein is the chief analytics officer at State Street Global Exchange, a senior lecturer in finance at MIT’s Sloan School of Management and a research affiliate at the MIT Laboratory for Financial Engineering.

Ten Equations that rule your life

We are very pleased with the number of people who were interested in our latest presentation. Here are some  interesting trivia about the ten equations presented.

1. Pythagoras’ Theorem: The square of the hypotenuse of a triangle is equal to the sum of the squares of its legs. The theorem is used in “triangulation” which is fundamental in finding your geographical position.

2. Newton’s Universal Law of Gravitation. They say it was an apple that fell on Newton’s head but the fact is that that several centuries later the equation is used to put objects in space, including satellites.

3. The Normal Distribution. it has the shape of a bell, also called “bell curve”, and was developed by French mathematician Blaise Pascal and Belgian mathematician Adolphe Quetelet. Drug research uses the bell curve to decide whether a certain drug or therapy has a benefit to most patients that take it.

4. Fourier Transform. Describes how patterns (e.g. information) in time evolve with respect to frequency. You can take a patter, say a photograph, break it down and analyse, which is what digital cameras do when you take a photo and store it as jpeg.

5. The Navier-Stokes Equations. The mathematician Leonhard Euler was fascinated with the flow of fluids so he figured out how flow related to the forces that acted upon it. French engineer Claude-Louis Navier and Irish mathematician George Stokes took it a step further. Aircraft designers use it when they design jets.

6. Maxwell’s Equations. James Clerk Maxwell discovered the connection between magnetism and electricity. Telecommunications are based on electromagnetic waves.

7. The Schrödinger Equation He is the man who thought the Cat Experiment that gave Feline Quanta its name (see here). He is also one of the fathers of quantum physics that says that fundamental particles (like electrons) can be waves too. Miniaturised transistors in the integrated circuits of computers and mobile devices must take into account “quantum effects”.

8. The logistic model for chaos. Originally it was used to predict how a population may fluctuate over time given limited resources. Then people realised that the equation described all kinds of “chaotic” phenomena, including the weather.

9. The Black-Sholes Model. They wanted to find a way to create investments with minimum risk. Fischer Black and Myron Scholes started working on the model which was then expanded by Robert Merton. The latter two won the 1997 Nobel Prize in Economics for the discovery. They set up an investment company, then went bust…

10. Second Law of Thermodynamics. It basically says that you cannot have your pie and eat it too when it comes to energy. In other words, there is a natural limit how efficient an engine can be, because of “entropy”, i.e. nature’s tendency to prefer disorder from order. Engine designers try to push efficiency to the limit.